State Of Tamil Nadu, Etc. Etc. v. L. ABU Kavur BAI And Ors. Etc. (1983) — Supreme Court judgment

| 725 STATE OF “TAMIL NADU, ETC. ETC.

vy.

L. ABU KAVUR BAI AND ORS. ETC.

- October 31, 1983 ‘

[Y.v. (CHANDARCHUD, C.J., S. Murtaza FaZAL ALI,. V.D, TULZAPURKAR, O, CHINNAPPA REDDY AND a A. VARADARAJAN, JJ.] . 4 - Constitution of India, 1950,-Articles 14, 19, 31, 39(b)and (c).

Tamilnadu Stage ‘Carriages and Contract Carriages (Acquisition) Act

1973—Nationalisation of stage carriages and-contract carriages—Vesting of .

vehicles, workshop etc. in the government on nationalisation— Whether. confiscatory legislation—Constitusionally valid and permissible—Scope of Articles 39(b) and @- What is, interpretation of Statutes. oo, -

Policy of Nationalisation evolved by government—-Duty of Courts to give .

effect.

Words and P Phrases ; “distribution” —“ Material resources" —Meaning of— oo Constitution of India 1950, Article 3900). ‘ :

The transport industry can be nationalised by two methods : (i) where the Government acts under Chapter 1V-A, (section 68 (>) and (c); of the Motor Vehicles Act 1939), after formulating the scheme for taking over a’route or routes, and (ii) the more effective method, to take ‘over the running of the entire transport’ services by nationalising them, along with their units, (Vehicles, workshops etc.) either by one stroke or by stages spread < over a: short time. . . .

The Karnataka State adopted the second method and the legislation viz., the Karnataka Contract Carriages (Acquisition) Act, 1976 was upheld by this

. Court in Strate of Karnataka and . Anr. v. Ranganatha Reddy. and Anr. » {1978] |

1S.C.R. 641,

’-The Tamilnadu State passed, the Tamil Nadu Stage Carriages and Con- tract Carriages (Acquisition) Ordinance, 1973 which later took the shape of the famjl Nadu Stage Carriages and Contract Carriage (Acquisition) Act, 1973.

The intention of the Act was to start the nationalisation scheme in one district of the State first and then extend it to other districts, Section 1 provided

‘ . . . t

2726 - ; SUPREME COURT REPORTS. [1984] 1 S.C.R.

_ that the policy of nationalisation sha]l come ‘into force on’ the 14th January,

1973. Clause (iii) of sub-section (4) (b) of section ! Jaid down that with respect to stage carriages in any other district -in the State,” the Act will come into force on such dates as the Government may by notification. appoint. Section 2 codified one of the clauses of the preamble by enacting a declaration that the Act was meant for - giving effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 of the Constitution and the acquisition in respect of the stage carriages and contract carriages and other properties referred to in section 4. ,

Section 4, the ‘pivotal section provided that on and from the date as may be specified by the Government in respect of any stage carriage or contract carriage operator, the permit issued to the operator shall vest in the Government absolutely free from all encumbrances and stage carriages or contract carriages which vest in the Government, shall by force of such vesting be freed and discharged from any trust, obligation and encumbrances etc. It was | further provided that any person interested shall have no claim in relation to such carriages or contract carriages taken over by. the State in pursuance of

_ the nationalisation policy and the claim, if any, would be limited to the amount payable under the Act- Sub-section (3) of section 4 contained a decla-

~. ration that the vesting of the stage carriages and other properties ‘shall be deemed to have been acquired for a public purpose and in public interest.

Section 6 provided for,a reasonable.” amount of compensation to be paid: to the operators on their properties yesting in the Government. Where the amount can be fixed by agreement, the same shall be determined in accordance ‘with the agreement and in other cases by an arbitrator appointed by the Government. Section 12 ‘provided foran appeal to the High Court against the award of the arbitrator.

. The schedule to the Act fixed the scale of compensation enunciated the principles oni -which it was to be awarded and contained the guidelines for . its payment. . soe

The operators whose stage carriages were taken over by the State

’ Government assailed the constitutional, validity of the Act in their writ petitions in the High Court.

“The High Court held that the-Act was ultra vires Articles 14 and 19 of the Constitution as it did not fali within the scope of Articles 31 C, and that by virtue of the Act the financiers who were the owners of the stage or ‘contract carriages would be completely wiped out of their business and that therefore Article 19 was clearly violated. it further held that the objects of Article 39 (b) & (c) have not been subserved and :since the vehicles taken over

- by the State under the Act were moveable properties Article 39 was not applicable. ‘ .

. In appeals ‘to this Court it was’ contended on behalf of thé State. that the

. Act squarely ‘fell within the protective umbrella 2 of Article 31C inasmucii as

TAMIL NADU Y. L, ABU 7127 in pith and substance, the Act sought to subserve and secure the objects

_ contained in ‘clauses: (b) and (c) of Articte 39 and was, therefore, fully prote- cted from’ the onslaught of Articles 14, 19 and 31.- The provisions of the Act are almost in pari materia with the ‘Karnataka Contract Carriages (Acquisition) Act, 19.6, which has been upheld by this -Court.. On the other hand, it was contended on behalf of the operators (Respondents' in the appeals and peti-

_ tioners in the writ petition) that the manner in which the transport services had been nationalised under the Act did not fall within the ambit of Article 39 (b) and (c) as: the buses or the vehicles were not an integral part of the policy of nationalisation, If the Act had nationalised the transport services «without taking over the units and the workshops, etc, then the operators could have had something to fall back upon to earn their livelihood. Complete deprivation of livelihood by the Act amounted to a confiscatory piece of , legislation and therefore void. . Allowing the appeals and dismissing the writ petitions :

HELD: The Tamilnadu Stages Carriages and Contract. Carriages’

(Acquisition) Act 1973 is constitutionally valid. (766 A]

1. By and large the provisions of the two Acts viz. "the Karnataka Contract carriage (Acquisition) Act, 1976 and the Tamil Nadu Stages Carriages and Contract Carriages (Acquisition) Act, 1973 appear to be identical in many respects and the general structure and the fundamental features of the two: Acts are almost same, In view of the clear decision of this Court regarding the constitutional validity of the Karnataka Act, very little survives so far as the arguments in this case, advanced on behalf of the respondents are concerned. _Further the three important decision in Minerva Mills, Waman Rao and Sanjeev Coke Manufacturing cases, reinforce and reiterate the conclusions reached in the Karnataka case.. (751 F, 752 D-E)

” (i) There appears to be . complete unanimity of judicial opinion on the point that although: the directive principles are not enforceable yet ‘the court should make a real attempt at harmonising and reconciling the directive principles and the fundamental rights and any collision between the two should be avoided as far as possible. [736 B]

(ii) Whereas in the 25th Amendment, the protective umbrella given by Constitution was restricted to laws passed only to promote objects in Cls. (b) & (c) or Art, 39, by virtue of the 42nd Amendment the limitations which were confined to Cls. (b) and (c) of Art. 39. were taken away and the Article was given a much wider connotation by legislating that Acts or laws giving effect to all or any of the principles laid down in part IV of the’ Constitution would be protected by the umbrella contained in Art. 31C and would be immune from

. challenge on the ground that they were violative of Art. 14 or-19. [738 C-D}

(iii, From a combined reading of Bharati’s and Minerva Mills’ cases as ‘also of the subsequent decisions, the undisputed position is that Art..31C, as introduced by the 25th Amendment, is constitutionally valid in all respects.

{738 G-H} .

428 suPREME COURT REPORTS [1984] 1 s.c.it.

oo 3. An important facet of Act 31C, is that there should be a clése nexus. . ° Cs A between the statute passed by the legislature and the twin objects mentioned in a , clauses (b) and (c) of Art. 39. The doctrine of nexus cannot be extended to such an extreme limit that the very purpose of Art. 39 (b) and (c) is defeated.

' By requiring that thete should be nexus between the Jaw and-Art. 39 (b) what

¢ is meant is that there must be a reasonable connection between the Act passed a and the objects mentioned in Art..39 (b) and {c) before the said Article can . >» B : apply. If the nexus is present in the law then protection of Art. 31C becomes complete and irrevocable, [739 F-740 A}: ° . a : ; om \- “ a - State of Kerala & Anr. v. N.M. Thomas & Ors,, [1976] 18.C.R. 906 at 993 to 996; His Holiness Kesavananda Bharati Sripadagalaveru vy. State of Kerala, - [1973] Supp. S.C.R. 1; Minerva Mills Ltd. & Ors. vy. Union of India & Ors., . {1981} 1S.C.R. 206 at 261; Waman Rao & Ors. etc. etc, v. Union of India & Ors., = ©; [1981] 2 S.C. R. 1 at 41; and Sanjeev Coke Manufacturing Co. v. Ms. Bharat _ Coking Coal Ltd. & Aar., [1983] 1 S.C.C. 147/160, referred to. . A. In a case where Art. 31C applies, iether. compensation j is necessarily mo, to be given, has the following facets -—

D . (a) if Art. 31C is taken, to exclude Art. 31 (2), the question of at compensation becomes irrelevant and otiose, [741 D] : ' (b) nationalisation of transport service by the State is unobjectionable and unexceptionable and can be accomplished i in three Y different methods :— . ‘

E (i) nationalisation of services and not units thereof, (741 E) aad

. . ' . a . «

~ (ii) nationalisation of the services alongwith the entire assets

“of the units, and [741 F] ‘ . ° . (ii) nationalisation of the’ services and patt of the assets of . - the units of the operators, _(74l G . . Ll In the instant case, the State of Tamil Nadu has taken recourse to ec

" method (iii) above, i.e. it has nationalised the'entire transport service as also -a part of the entire assests of the units thereof.” As nationalisation is a policy _ decision, an enquiry‘into the policy of the legislature or the considerations + . governing the same, cannot be-made by the courts unless the policy. is so absurd —— ‘G -as to violate the provisions of the Constitution. In view of Art. 31C, the court cannot strike down the Act-merely because the compensation for taking over the transport services or its units is not provided for. -The reason for this is that Art. 31C was not merely a.pragmatic approach to socialism but imbibed a. a - theoretical aspect by which all means of production, key industries, mines, . — \ - minerals, public supplies, utilities and services may be taken gradually under , Hi public ownership, management and control, (741 H-742 B) . ; _— +?

Akadasi Padhan v. State of Orissa {1963} Supp, (2) S.C.R. 691, referred “to. . “ ae iin ad

TAMIL NADU ¥.L, ABU 729

5. From.a perusal of Bharati’s as also Karnataka cases the following ‘ ’ principles for assessing compensation after the amendment of Art. 31 (2) by substitution of the word ‘amount’, emerge : -

(1)" that compensation should not be arbitrary or illusory, oy

(2) that the amount. fixed: as compensation ‘should not be unprincipled, _ . ‘

(3) that the compensation sought to be paid should not be so “arbitrary or illusory as to be unconscionably, shocking, and

(4) it is not necessary that compensation must represent the actual — “market value or be adequate for even if compensation is ‘jnadequate but not illusory, the requirement of Art. 31 (2) is fully complied with, {755 E-H]

In the instant case, on the question of compensation the relevant sections of the Act are completely in accordance with the principles enunciated above”

and hence the argument of the counsel for the respondents that the compensation is wholly inadequate o or illusory must be overruled. [756 A] _

. .

"6. (i) The compensfition awarded ar the’ principles contained in the .

various sections of the Act are not illusory but amount to’a just and sufficient compensation to the operators whose properties are taken away. in fact, it was

"to meet such situations that Art. 31C was introduced so that any obstacle resulting in evil consequénce to the operators.or persons whose properties are taken * over is completely removed, [757 B}

“In the instant case, the State -has nationalised the stage and contract carriages for the purpose of providing a general. and expeditious transport at,

. Teasonable rates to the members of the public and such a policy is undoubtedly in public.interest and involves an important public purpose. - [758 F]

(iiy Art. 39 (b) does not mention either moveable or immovable property. The actual expression used is ‘matetial resources of the community’. “Material resources” -are wide enough to cover not only natural physical resources but also moveable or immovable properties. -[759 E}

7. (i) If the State chooses to monopolise trades in, certain essential

_ commodities or properties, the purposes mentioned in Art. 29 (b)'& (c), Art.

31 (2) would -be completely excluded;. otherwise no State monpoly is ever possible. It was for this reason that Parliament thought it advisable to protect the ‘objects contained in Article 39 (b) & ) from the purview of Art. 31 (2).

(761 D-F}.

(ii) Article 31 (2) by virtue’ of the 25th Amendment omitted the word ‘compensation’ and had -substituted the word ‘amount’ which gives ample , discretion to. the State to fix a reasonable amount if the property of an individ- ual is taken over fora public purpose. The court in such matters cannot .

730 a SUPREME COURT REPORTS . 1984) 1 $.c.R, interfere’ with the amount so fixed unless it is shown to the court’s satisfaction

A that the amount fixed is so monstrous as to shock its conscience. [761 G-762 A] ‘8. The persons whose properties are taken over cannot be heard to ‘complain that the compensation awarded to them should be according to the market value which, if conceeded, would defeat the very purpose and objective of.Article 39 (b) & (c). The principles that emergé are.

_(1) that in view of the express provisions of Art. 31C which excludes Art. 31 (2) also, where a property is acquired in public interest for the avowed purpose of giving effect to the principles enshrined in Art. 39 (b) & (c), no compensation is necessary and Art, 31 (2) is out of the harms way, and oo (2) That even ifthe law provides for compensation, the ' courts ‘ -* cannot go into the details or adequacy of the compensation and it is sufficient for the State to'prove that the compensation, was reasonable and not monstrous or illusory so as’ to shock thé conscience of the court. [762 E;C-D] Inthe instant case, both the conditions mentioned above are fully satisfied having regard to the provision of the Act [762 F] sO

9. It will not be correct to construe the word ‘distribution’ in a purely literal sense so as to mean only division of a particular kind ‘or to particular E, ‘persons. The words, apportionment, allotment, allocation, classification, ‘ clearly fall within the brodd sweep of the word ‘distribution’. “So construed, the word ‘distribution’ as used in the Art. 39 (b) will include various facets, aspects, methods and terminology of a broad-based concept of distribution.. . The word ‘distribution’ does not merely mean ‘that property of one should be taken over and distributed to others like land reforms where the lands from the -

’ big landlords are taken away and given to landless labourers or for that matter F the various urban and rural ceiling Acts. That is only one of the modes of distribution but not the only mode. (763 G-764 A]

* In the instant case, distribution is undoubtedly there though in a_ different shape. So far as the operators were concerned they were motivated by . making huge profits and were most reluctant to go to villages or places where : G the passenger traffic is low or the track is difficult. This naturally caused serious inconvenience to the pooranembers of the Community who were denied the ; facility of visiting the towns or other areas in a transport. By nationalising the - transport as also the units the vehicles would be able to go to the farthest cor- . ner of the State and penetrate as deep as possible and provide better and quic- H ker and more efficacious facilities. This would undoubtedly be a distribution for the common good of the people and would be clearly covered by el, (b) of

Art, 39. OSB. -C] - ae

“TAMIL NADU VY. L. ABU, 731

~ 10. Once a policy of nationalisation is in public interest and for public good, some losses, some damages, some prejudices and some harsh consequences ‘are bound to follow. but this does not mean that the aforesaid considerations should result in a stalemate of the policy of State monopoly ‘or nationalisation, 1756 H)

CrvIL ApPELLATE JURISDICTION : Civil Appeal Nos. 957- -966(N) of 1973 and 435- 442 of 1976.

From the Judgment and Order dated the 24th April, 1973 and

- 19th April, 1973 of the High Court of Madras in Writ Petition Nos. 1647, 1900, 1466, 1557, 1559, 1527, 1256, 1488, 1584 and 1585/73 and 741, 157, 132, 123, 288, 1486, 1528 and 876/1973 respectively.

. t AND rs

Writ Petition Nos. 8818 of 1982 and 312-313 of 1979. (Under article 32 of the Constitution) -

SS. Ray, R.K. Garg and A.V. Rangarm for the Appellants.

Vineet Kumar fot the respondent No. 1 in n CA. Nos. 965, 966, 437 & 439, so ,

* GL. Sanghi and Miss Lily Thomas for the iponden No. | in CAs. 957 & 962 & W.P. No. 8818/82.

K.K. Venugopal; A.K. Sen, ATM. Sampath, M.N. Rangachari,

S? Srinivasan and Mahabir Singh for the respondent No. 1 in CAs, 959, 960-961, 963, 964 & Respd No. 1 in CAs. 435-427.

| J. Ramamurthi for the respondent No. 1 in C.A, No. 438.

ATM. Sampath for the petitioners in WPs, 342 & 313/79.

KG, Bhagat Additional Solicitor General Miss A. Subhashini, T.V.S. Narasihma Chari’ and C.V. Subba for the interveners, (For.

- Att. Genl).

AY, Rangam for Eherran Transport.

‘E

; 732 SUPREME court REPORTS. [1984] 1 s.c.R.

A.T.M. Sampath, M.N. Rangachari, S. Srinivasan and Mahabir

Singh for K. A. Kanappa Chetty & T. R, Subhraj.

Employees Union. —

“B, Parthasarthy for Ady, Genl. Orissa and Cherran Travisport

Ashak Grover for Ady. Gen. J&K.

A.K. Sen, A.M. Sampath and K. Ram Kumar for D. Kannia Pillai, M/s. Sundaram » Finance “P.T, Krishnan and S.K. Nandy for

' State of Assam.

. _ The Judgment of th the Court was delivered by.

Fazau Axl, J. One of the planks of building an egalitarian society in order to achieve socio-economic emancipation is the policy

_ Of nationalisation of industries. Easy, cheap and-dependable trans- port is a prime social necessity. Unfortunately, no State. has beeh able to achieve this goalso far bya full-fledged nationalisation. Reliance is largely placed on schemes framed under Chapter IV-A of the Motor Vehicles Act.

"Perhaps Karanataka was the only State’ which ‘having become ‘sadder and wiser’ took the Jead in enunciating the bold step of complete nationalisation of the entire transport industry but, unfortunately, it has not yet been able to implement it fully.

There are two methods by which the transport industry can

‘be nationalised :—

(1) where the Government acts under Chapter. IV As. 68 8 (b)

&(c) of the Motor Vehicles Act) and after due publication formulates a scheme for taking over route or routes and invites objections thereto. After the objections have been received they are decided and ultimately processed. This method ‘however is dilatory and involves a time consuming process which leads to delaying tactics

_adopted.by the operators. Even so, after the objections have been decided, the operators or the persons concerned are not satisfied but go up in appeals to the law courts. " These delaying tactics have resulted in most cases in-an indefinite postponement of the

~ scheme of nationalisation. Moreover, normally this process is af

_ TAMIL NADU ¥. L. ABU (Fazal ‘Ali, J.) 733 applied to a, route or routes selected by the Government and is accomplished by stages which also takes a long time.

Q) Another method which is the. more effective one is to take

* . over ‘the running of the entire transport services by nationalising them, alongwith their units (vehicles, workshops, etc.) either by one stroke.or by stages’, spread: over’ a short time. This course is clearly

_ permissible under cls. (b) & (c) of Art. 39 of the Constitution’ as would be discussed i in a later part of the judgment,

The Karnataka State tried the second method and: soci . to same extent, but ran into difficulties for one reason or the other.

' The Tamil Nadu State following the Karnataka ‘pattern passed the impugned Ordinance, which later took the shape of the Tamil Nadu . Stage Carriages and Contract Carriages -(Acquisition) Act, 1973

. (hereinafter referred to as the ‘Act’) to nationalise the State transport industry by stages. The Madras High’ Court ‘staged the operation of the Ordinance as-also the Act and declared void alll its provisions. -As a result, nationalisation of transport became a still-born child ;

-. and its progressive policy was stifled the day it was put into action.

It is this judgment of the High Court which is the subject

- matter of appeals and writ petitions before us. The Madras’ High

Court declared the Act ultra vires as being violative of Arts. 14 and. . 19 of the Constitution as it did not fall within the protective umbrella contained in Art, 31C and ona number of, other grounds which: would be examined hereafter.

It is manifest that the attempt of the Tamil Nadu legislature

. to’give effect to the principles enshrined in Art. 39% b}&(c) would have secured the socialist objective aimed by the Constitution in order to build up an egalitarian society, By virtue of complete nationali-

‘ sation the numbers of the public or the community would. bave got much better and greater facilities than afforded to them by the private operators running vehicles under permits. Secondly, the efficiency and: efficacy of the services would undoubtedly make a

“marked ‘improvement in the manner and method of running ,the : vehicles as compared to the services run by private . operators.

Thirdly, prior tothe passing of the Act, the entire services were

_ actually run behind the screen through- various financiets in the name of the operators with whom they had entered into hirepurchase agreements. This obviously led to concentration of wealth

_ in the hands of a few. With the coming into force of the total

734 __ SUPREME COURT REPORTS ‘ [1984] 1s.cr.

nationalisation scheme, this device of concentration of wealth would be completely nipped in the bud resulting in an equal distribution of wealth and services among the people of the country. Fourthly, the private services run by the operators mainly inspired. by profit making motive neither had the will nor the capacity to penetrate as deep.as possible into areas so far iaaccessible to the travelling public and would confine their running of the services only to serve important points. When the State takes over the entire transport services, it wuld undoubtedly be its duty to see that the vehicles reach the " most distant part or corner of the State and serve as many travelling public as possible so that nobody is caused any inconvenience. These are some of the initial advantages of a total nationalisation scheme,

| which would be brought to the fore and provide an ideal service

_for the members of the community at large. - It-may be that in this - process some financiers would suffer loss and some operators may also be wiped out of the kusiness but this cannot be helped as the scheme of our Constitution is that individual rights or benefits must yield to the larger benefits and good of the entire comniunity. Some of these points were very claboratély dealt. with in the case of State’

of Karnataka & Anr. ete. v. Ranganatha Reddy & ‘Anr. etc.() (for facility, hereinafter referred to as ‘Karnataka case’),

The Act was for the purpose of carrying out and implementing ' the objects specified in Art.39(b)&(c) and was, therefore, immune from challenge on the ground that the Act or its provisions: were violative of Art, 14, 19 or 31. This was accomplished by virtue’ of

~ Art.31C, introduced by the ‘25th Constitution Amendnient, which .

gave a protective umbrella to such acts so as to exclude them from the operation of Arts.14; 19 or 31. Before dealing ‘with the provisions of the Act we might give aresume of the importance and significance of the directive principles contained in Art-39()&4(c).

which may be extracted thus :

“39, The ‘State shall, in particular,” direct its policy towards securing — ‘

- . > . . e (b) that .the ownership and control of the material . resources of the community are so distributed as best to subserve the common good;

~ ) , 1978] 1 SCR 641. '

. TAMIL NADU ¥, L: aBU (Fazal Ali, J.) , 735

' (c) that the operation of the economic system does not _ Tesult in the concentration of wealth and means of _. production to the common detriment.”

We would not like to tread on the difficult and delicate ground as to ‘whether or not the directive principle or the fundamental rights: have primacy over one or the other. Nevertheless, it would appear .

that right from 1959 uptodate this Court has stressed and emphasised the importance of directive principles i in a number of cases, some of which may be listed below : ~

(a) Mohd. Hanif Quareshi & Ors. ¥. State ot Bihar (1959 SCR 629 at 648) - -

{b) In Re the Kerala Education Bill “1957 (1959 SCR * 995 at 1020, 1022)

(d)- Chandra Bhavan Boarding & Lodging, Bangalore v. . The. State of. Mysore & Ant. (1970 " ® SCR 600 - ‘at 612)

(e). His Holiness Kesavananda Bharati Sripadagalaveru . v. State of Kerala (1973 Supp. SCR 1)

In State of Kerala & Anr. v. NM. Thomas & Ors.(1) one of us (Fazal Ali, J) reviewed the earlier cases and has collected the ratio of all the e decisions on this point at one places

‘In recent decisions On the subject the view that has orystallised ; is that the courts should attempt to give a harmonious interpretation to the directive principles contained in part IV of the Constitution even though not enforceable. Attempt should, therefore, be made to teconcile the two important provisions rather than to arrive at _conclusions which «bring into’ collision these two provisions-one ~ contained in part HI and the other in part IV. We must appreciate - that the reason why the founding fathers of our Constitution did not advisedly make these principles enforceable was perhaps. due to the ‘vital ‘consideration of siving the Governnient sufficient latitude.

——— . (1) [1976] 1 SCR 906 at 993 to 996, iH

736. _ SUPREME COURT REPORTS

“a

“to implement these ‘principles from - ‘time to time according to capacity, situations and circumstances that may arise.

: Ona careful consideration of the legal ‘and historical ‘aspects.

“of the directive principles and the fundamental rights, there appears . - “to be complete unanimity of judicial opinion of the various dedisions of this Court on the point that although the directive principles are.

“not enforceable yet the court should make areal, attempt at harmo-

-nising and reconciling the directive principles and the fundamental, Tights and any collision between the two ‘Should be.avoided as far as

; possible.

In the instant case, we are. really concerned with the second ; “limb of the Constitution, ‘viz., the importance and significance of . the directive principles contained in part IV. We now propose to

- ‘discuss the purport, significance, Scope, ambit and rationale of

Att.31C, which may be extracted thus-::

*31C. Saving of laws giving effect to certain directive principles ‘Notwithstanding anything contained in article 13, no Jaw - giving effect to the policy* of the State towards securing all or.any of the principles laid down in part IV ' shall be deemed to be void on the ground that it is, inconsistent with, or takes away or abridges any | of the rights’ conferred by article 14.0r article 19; and no law. ‘containing a-declaration’ that it is for giving effect to . such policy shall be called in question in-any court on- the ground that it does not give-effect to such Policy :

Provided ‘that where such law is made by the Jegislature . of a State, the. provisions of this article shall not .. apply thereto unless such law, having been reserved for the consideration of the President,. has’ ‘Teceived his vassent.”? >

A brief setting and origin of this. Article is contained i in the Objects. and Reasons of the Constitution (25th Amendment) Act, - - 1971, which show that - the amendment’ was introduced with the main, objective of getting over the difficulties: placed in the way of | giving effect to the directive principles of State policy,

[1984) Is GR.

“vO al

_™

’ had received the assent of the President of India. We might mention - ‘here that it is undisputed in the instant case that the impugned law .

. TAMIL NADU ¥.L. ABU (Fazal Ali, J. ) 2 BT

Iti is manifest from a bare reading of the niewly added Axt3lc ;

"that any law effectuating the policy of the State in order to secure or.comply with-the directive principles Specified in clauses (b) and — (c) of Art:39 -would not be deemed to-be void even if it is inconsis- - tent with or violates Arts. 14,19 or 31. ‘It was further- provided.

that any law which ‘contains a declaration that it was put on the -

"statute book for giving effect to such a policy, the same could: ‘not

~- be called, intO question in any court on the ground -that the new law does not give effect to the policy. In other words, the position | ‘was that once Art.31C was put on the statute book, the question of.

any law being i in violation of infraction of the fundamental rights ‘contained in part Tif (Arts.14, 19 and 31) ‘ceased to. be justiciable,

- Art.31C further provided that where a ‘law is made by the legislature of a State, the provisions of this Article would _ dpply only if the law had received the assent: of the Presihent and is, therefore, fully enforceable in-the State of Tamil. Nadu if it fulfils the conditions | of Art.31C, which it doubtless does. A. substantial part of. this amendment appears to have ‘been held to be valid by-a majority of.

7:6 in His Holiness Kesavananda Bharti- Sripadagalaveru v. State of Kerala() (hereinafter referred to as ‘Bharti’s case) but: a portion. of

Art. 31C was held to be. invalid.

: While. consdering the scope, “ambit and constitutional . validity _ of Art.31C, the majority. judgment’ in Bharati’s case. (supra) held - that the first part of Art.31C was valid but the second part, viz., ° “and no law coitaiaing a declaration that it is for giving. effect to such policy shall be called in question in any court on the ground that it does not give effect. to. such policy” was held to be invalid,

In other wotds, so far as the present aspect of the case before us is concerned, the majority judgment clearly held that while “Art3IC , _ permitted Parliament to make .any law giving effect to the policy of ’ the State towards securing the principles. contaisted-in cls. (b) and

(c) of Art. 39, such law could not be declared void even if such a cdurse of action violates or abridge any of the: rights conferred. } by

Art. 14, 19 or 31.

Another crucial. stage in the history of AIC. ‘arose when the famous 420d amendment of the Constitution was. . Passed by the:

Gy 11973) Supp SCR 1, an 7 - an

. H

238 _ SUPREME COURT REPORTS . [1984] 1 scr.

‘Parliament. By virtue of this amendment a complete, irrevocable . and impregnable constitutional’ protection was given to Idws passed. " . not only to implement the ‘principles - specified in cls. (b) & (c) of

Art.39 but also the principles contained in all the clauses of Art.39.

_ However, to put the record straight and to complete the history of ’ Art.31C we may briefly indicate the distinction between the. 25th and 42nd amendments thus :

. ‘Whereas in the 25th amendment, the protective umbrella given ‘ by the Constitution was restricted to laws passed only to promote objects in cls, (b) & (c) of Art.39, by virtue of the 42nd amendment

: the limitations. which were confined to cls. (b) and (c) of Art.39 were taken away and the Article was given a much wider connotation by legislating that Acts or Jaws given effect. to all or ‘any of the principles laid down in part IV of the Constitution would be protected by the umbrella contained in Art.31C and would be immune from challenge on the ground: that they were violative of Art.140r19

Even so, in Minerya Mills Ltd. & Ors. v. Union of India & Ors.,(2) one of us (Chandrachud, CJ) while referring to the ratio of Bharati’s case on the unamended Art.31C observed as follows :

“Indeed, if there is one topic on which all the ' 13 Judges.in Kesavananda Bharati were agreed, it is this : that the only question open to judicial review under the unamended’ Art.31C was whether there is ‘a direct and ~ reasonable -nexus between the ‘impugned law and the provisions of Art.39(b) and (c). Reasonableness is regarding the nexus and not regarding the law,’ , . (Emphasis ours) Thus, it would appear from a combined* reading of Bharati’s and Minerva Mills cases as also of the subsequent decisions: that the * undisputed position is that Art.31C, as introduced by the 25th amendment, is constitutionally valid in all respects. -and has survived the stormy decision of Bharati’s case. | -y

(1) {1981] 1 SCR 206 at 261, faMiL NADU . L. abu (Fazal Ali, J.) 739 | ty + Similar observations were tnade in Waman Rao & Ors. etc. ~ v. Union of India & Ors. (2) where one of us (Chandrachud, CJ) observed thus :

Ao “Article 31 is now out.of harm’s way. In fact, far A ~ from damaging the basic structure of the Constitution, oo : laws passed truely and bona fide for giving effect to dire- + 4 , ctive principles contained in clauses (b) and id (0) of Article 39 will ill fortify that structure.” oan ‘ :

s *

(Emphasis supplied)

In the latest Constitution Bench decision of. this Court in Sanjeev Coke Manufacturing Co. v. M/s. Bharat Coking Coal Ltd. y >. & Anr.,(2) it has “béen emphasised that the constitutional validity 7 - Of:Art.31C is now beyond challenge and in this connection one of | us (Reddy, J.) speaking for the Court. made the. following ~ observations : . :

“In the second place, the question of the constitu- _ tional validity of Art.31C appears to us to be concluded ™. . by the ‘decision of | the Court in Kesavananda Bharati case.’

In view of the aforesaid decisions, it is not necessary for-us to dilate further on the question of | the constitutional Validity of Art. 3 Ic.

Another important facet of Art. 31C which has been empha-_ sised by this Court is that there should be a close nexus’ between

. the statute passed by the legislature and the twin objects mentioned 7> in clauses (b) and (c) of Art.39. In approaching this problem and considering the question of nexus a narrow approach ought'not to “+ be made because it is well settled that the ‘courts should interpret a constitutional provision in order to suppress the mischief and advance the object of the Act. The doctrine of néxus cannot be .- ' - extended to such an extreme limit that the very purpose of Art.39 ys _ (b)&(c) is defeated. By requiring that there should be nexus ne _= between the law: and Art.39(b)&(c} what is ment is that there must a \ - beareagonable connection between the Act passed and the objects a

* Gy I98I2SCR1at4. oe .

(2) [1983] 1 SCC 147/160, -

B :

iG - ‘

‘.*- ° 14 with the broad egalitarianism of Article 39 (b) or by

440, - SUPREME’ COURT REPORTS. {1984} 1 8.C.R.

; mentioned i in Art 39(b)&(c) before the said. “Article can apply. If the nexus is present in the law then. thé protection of Att, SIC becomes ~ ., complete and irrevocable. - re

Futhermore, the fact that there isa declaration ; in the Act :

- regarding the purpose mentione in Art.39(b)&(c) may generally be evidence of the nexus between the law.and the objects of Art.39(b) &(c). An, this connection, Tyer,J., in the Karnataka case observed. ‘thus’:

“The requisite declaration contemplated, in Article 31C is thus made in the preamble as well as in section 2 of the Act,..... The. nexus between the taking of property and the public purpose springs necessarily into - . existence if the former is capable of answering the latter.”

" There is no particular magical tinsel or ritualistic formula in

- the term ‘nexus’ which may be closed in a strait-jacket. Evena .

nationalisation scheme meant for. the purpose of distribution or -

“preventing concentration ‘of wealth, as in this case, would be suffi-. ‘ cient nexus to attract the Operation of Art.39(b)&(c). On this aspect of the matter, Tyer, J. in the. Karnataka case further observed thus : :

“The next question is whether nationalisation ‘an | . have nexus with distribution.......... To.‘distribute’, even . in its simple dictionary meaning, is to, allot, to divide "into classes or into ‘groups’ and ‘distribution’ embraces ., - “arrangement, classification, placement, disposition, apportionment, the way in which items, a quantity, or ‘the like, is divided or apportioned; the system’ of disper 7 ing goods” throughout a community."’ a

Ina later decision in. ‘Sanjay Coke Manufacturing Co.’s case (supra), adverting to this very point, one of us (Reddy, J. ) made the . following observations <

“We are firmly 0 of the opinion that where Article 31C _ comes in Article 14 goes out.. There is ‘no’ scope for _ bringing in Article 14 by a side wind:as it were, that is, by equating the rule of equality before the law of Article - treating the principle of Article’. 14. as invinded inthe. » Principle. of Article 39 ©). ” . ne

TAMIL NADU Y. 1. ABU u (Fazal Ali, J. ) AML

We ‘might now mention in passing - some “important facets © _ of Art. 31C which we shall discuss in detail when we deal with’ the. various provisions of the Act in the light of the reasons given- by. the

‘High Court and the contentions advanced before us, At this stage, suffice it to say that on a proper and true construction of Art, 31C‘in

‘the light.of the decisions of this Court, the question of compensation becomes totally irrelevant. If, once the conditions mentioned in Art.

31C are fulfilled by the law,.no question of compensation’ arises _ - beéause the said Article expressly excludes not only Arts. 14 and 19 but also 31 which, by virtue of the 25th amendment, had replaced the word ‘amount’ forthe word ‘compensation’ ‘in Art. 31-(2). As already extracted, Chandrachyd, CJ.in- Waman Rao’s casé has

_ observed that once Art. 31C is sattracted, Arts, 14, 19 and 31 are out. - of harm’s way.

The question whether in a case where Art. 31C applies, compensation is necessary to be given, has the following, facets ;—

(a) sif Art, 31C is taken, as 5 it must be, to exclude “Att. « . 312), the question of compensation becomes irtelevant and otiose, |

(b) nationalisation. of transport Services by the State is unobjéctionable ‘and’ -unexceptionable ‘and can be accomplished in three different methods — -.

~ (i) nationalisation of the services and not : the units : thereof,

(ii) nationalisation’ of the services alongwith. ‘the " entire assets of the units, and | : (iii) nationalisation of the: Services and part of the - assests of the units of the operators. | in the instant case, the State. of Tamil Nadu has taken recourse to method (iii) above., ie, it has nationalised the entire transport”

- service:as also a part of the entire’assets of the units thereof. It is -

_ obvious that as nationalisation. is a policy decision, an enquiry into. . the policy of the legislature or the considerations governing the same

' cannot be made by the courts unless the policy is so absurd as: to:

violate the provisions of the Constitution: In view of Art,. 31C,

14 | | SUPREME couRT REPORTS (1984) 1 S.C.R.

which. gives protective umbrella against Art. 31 (2) also, the - court “cannot strike down the Act merely because the compensation for taking over the transport services or its units is not provided for. The reason for this is that Art. 31 was not -merely a pragmatic approach to'socialism but imbibed-a theoretical aspect by which all © means of production, key industries, mines, minerals, public supplies, utilities and-services may be taken gradually under public ownership, management and control.

Even as far back ‘as 1963 in Akadasi Padhan vy. State of Orissa,() Gajendragadkar, J., speaking for the Constitution Bench, observed thus : . - 4 oo “To the: rationalist, nationalisation or State | '. -ownership is a matter of expediency dominated by consi-' derations of economic efficiency and increased output of production... ' The amendment made by the Legislature in ‘Art. 19 (6) shows that according to the Legislature, a law + _ relating to the creation of State monopoly should be presumed to be in the interests of the general public.

Art. 19 (6) (ii) clearly shows that there is no limit placed on the power of.the State in respect of the creation of

State monopoly...... In our opinion, the amendment clearly indicates that State monopoly in respect of. any.

trade or business must be presumed to be reasonable and, in the interests of general public, so far as Art. 19 (1) (g)

is concerned, ”

‘ Thus, even in 1963 the change in the approach by the Supreme :

Court towards social problems had come to be seriously felt so much so that any policy of nationalisation of assets or State monopoly was held to be so necessary to acquire the goal of building an egalitarian séciety as to make the ‘restrictions contained in Art. 19 (1) (g) ' reasonable. In other-words,.even if Art. 31C was not there, the ‘policy of nationalisation of transport services could be held to’ be valid on the basis‘of this decision and would not violate Art. 19, being a reasonable restriction. The major part of the spirit of Art. :

| _31C, which was introduced almost a decade after the above decision,

(1) {1963] Supp. 2 SCR 691,

—_:

~-ee-

TAMIL NADU ¥. L; ABU (Fazal Ali, J.) - 743

‘was clearly anticipated and accepted in ‘Akadasi Padhan’s case (supra). and this Court in a way paved the way for more socialistic reform which may destroy any obstacle coming in the way of achieving the important directive principles of the Constitution. More than this we would not like to say anything regarding this decision because

Arts. 14, 19 and 31 are completely excluded. by Art. 31C. The provisions to validate laws made to secure the objects in Att. 39 (b) &(c) seem to be the conclusive chapter of a humble beginnig with an appeal to the courts to make a doctrinaire and pragmatic approach a ‘in such cases, -

' My. Ray rightly argued that in view of the provisions of Art. -.

. 31C, the Act squarely falls within the protective umbrella of the said

Aiticle inasmuch as in pith and substance, the Act seeks to subserye and secure the objects contained in clauses (b) & (c) of Art. 39.and

__ is, therefore, fully protected from the onslaught of Arts. 14, 19 and:

31. Tocounter the argument of Mr. Ray, S/Shri Ashoke Sen, ‘Venugopal and Sanghi made two fold. submissions. In the first ° place if was argued that the manner in which the transport services

- had been nationalised under the Act doés not fall within the ambit of Art. 39 (b) & (c) as. the buses or the vehicles were not an integral part of the policy of nationalisation. Secondly,

.Mr. Venugopal submitted that if the Act would have- nationalised the transport . services without taking over the units and ~ the workshops, etc., then the operators could have had something to fail back upon to earn their livelihood. Complete deprivation of. livelihood by the Act amounts to a confiscatory piece of legislation

. and therefore void. Although the arguments are attractive, on closer scrutiny they seem to be without substance. Once it is held that the

. policy of nationalisation ‘of transport services is valid, which is no doubt an essential service and a type of a State monopoly, any consequence that may follow cannot be taken into consideration; otherwise

-. no social reform can ever be brought about. All schemes. of mono- - poly or nationalisation are meant to serve the public good and individual interests in such cases must yield to the. good of the general public. Moreover, on a close examination of the argument it seems to us that it is wholly untenable. The various provisions © of the Act clearly provide for a just and reasonable compensation’ which may not be equal to: market value of the units taken over but cannot be said to be illusory or shocking to the consience of the . court.

_ +

744 . SUPREME couRT auForts (198) 1 SCR.

‘Although we have found that Art, 3 having been exchided no: : question of compensation arises, even so it seems to us that the . - courts while interpreting the policy of total nationalisation and being -

‘imbued with a keen sense of the doctrine .of justice and-fair play have projected. the question of compensation ‘in a‘very “limited sense and a restricted extent by holding’ that the word ‘amoant’ merely: — - means some sort of a reasonable amount which may or «may not be.

adequate in the circurhstances. We feel that in view of: the explicit

. and express provisions of Art. 31€ the question of compensation does not arise at-all-and even if it does, the matter is concluded by a‘: 7-Judge Bench decision of this Court in the Karnataka case.

_ Having dealt with the various aspects of Art. 31C, we now proceed to examine. the provisions of the Act inthe light: of the law Jaid down by this Court and the aforesaid conclusions reached by us. To being with, the-Act gives a detailed preamble: describing the ends and objects of the Act. We might mention that in the first paragraph of the preamble, cl. (c) of Art; 39 was not mentioned im the. :

Ordinance but when the Ordinance was replaced by the Act,*cl. (c) of Art. 39 was inserted. A perusal. of the various clauses of - the

7 preamble reveals that the legislation was a purely progressive measure meant not to confiscate the property or destroy the business of the

"stage carriage operators but to take absolute control of the State transport services by stages in various revenue dirtricts.

As already-indicated, the Act was preceded by an Ordinance,” — containing identical provisions, which was issued on 12.1.1973. The: constitutional validity of the Ordinance was challenged in the Madras High Court and while the judgment of the.High Court’ was pending, the Ordinance was’ replaced by the Act on March 14, 1973. The : High Court struck down the Ordinance as being unconstitutional and an interim order was passed by which all the provisions of the Act . were stayed, pending appeal to this. Court. “: ome time in June 1973, an interim ordér was passed by this Court by which the transport ~-vehicles not taken over by the State were stayed from being taken - over. a

“Coming | to the provisions of the Act, it would: be seen: that $0 far ass. I is concerned,-it is more or less descriptive with the only difference that ‘as far as the Nilgiri District is concerned, the provision says that the policy of nationalisation shall come into force ~ on the 14th of January 1973. In other words, the intention of. the

TAMIL NADU py, Le Bu (Fazal Al, Jo.) 745

Act is to start the nationalisation scheme with the Nilgiri district first. and then extend: it to other districts as and when it beconies necessary. Clause (iii) of sub-cl. (4) (b) of s. 1 lays down that with Tespect to stage carriages in any other district i in the. State, the Act will come into force on'such date as the Government may by notifica- . tion appoint, Section 2 codifies one of the clauses of the preamble. by enacting a declaration that the Act is meant ~for. giving effect’ to the policy of the State towards securing the principles specified in cls. {b) and (c) of Art. 39 of the Constitution and the. acquisition in - ‘respect of the stage carriages and contract carriages and other proper-

" ties referred to in section 4. -After thé Act was passed, by virtue of the decision i in the Bharati’s case whatever. may have been the legal status or position of the directive principles so far as clauses (b) & (€) ~ of Art. 39 are-concerned, they were held to be constitutional.and any. ~

"Act passed to eaforce these principles clearly. fell within the protective

~ umbrella of Art. 3!C and was therefore immune from challenge. We have already. adverted to this aspect of the matter heretofore. -

Sub- “Ss. 2 (a) of s. 2 provides that the acquisition ‘of the ‘stay.

. _ Carriages | shall commence - with the districts wherein . comparatively

' fewer mumber of stage carriages were -operating. This provision —

_ appears to have been incorporated i in order to cause the least possible

‘inconvenience to the bus operators so that the operators- -of the other districts were the nationalisation of the scheme has not been enforced . may make due preparations and alternative arrangements in case the concerned ‘districts are also included in the nationalisation scheme by virtue of ‘the notifications issued from time to time under the Act. Section 3 only gives the definitions of the various expressions . used in-the Act and, for the time being, it may ‘not be necessary for

. us to give a detailed description of cls. (a) to > (8) of this section.

“Section 4, which i is the pivotal section, provides that -on. and from the date as may be specified by the Government in respect of ‘any stage carriage or contract carriage operator, the permit issued to the operator shall vest in the Government absolutely. free from all encumbrances and such carriages or contract carriages, which vest’ . in the Government, shall by force of such vesting be freed and dis- _ charged from any trust, obligation and encumbrances, etc. - In other words, the intention of the Act was that while nationalising the © State | transport services ‘the State should not encumber itself! with the liabilities, that may have been incurred byt the. bus operators. ‘Prior to

7 146. oe SUPREME COURT REPORTS stay i s.c. R. the enforcement of the Act so.that the policy of nationalisation may run smoothly and without any obstruction or obstacle. At the same time, s. 4 also provides that any person interested shall have no claim

.in relation to such carriages or contract carriages taken. over by the State in pursuance of the aforesaid nationalisation policy and the claim, if aay, would be limited to the amount payable in respect of

_ such stage carriages or contract carriages as provided under the Act.

Sub-s. (2) of s. 4 lays down an important safeguard that -all -rights, title and interests of the stage carriage operators or contract carriage — operators; including lands, buildings, workshops and other places, stores, instruments, machinery, tools, plants and other equipments used in connection with the service of these carriages would also vest in the State.

There was a serious controversy regarding this provision and it was vehemently attacked by the counsel for the respondents on the ground that this is a very harsh and strident provision of the Act - which completely destroys not only the fundamental right of -the " operators but also the right to equality under Art.14. Even if. Art. 14 or 19 apply, the vesting of machinery, tools, etc., which were the personal. property. of the operators meant to carry on their business, ‘would amount‘to a confiscatory piece of legislation. -We shall. deal with this aspect of the case when we consider the various contentions advanced before us by counsel for both the parties. At this stage, .

it is sufficient to remark that even the books of account, registers, _ etc,, would vest in the Government on the issue of the notification and all hire-purchase agreements and ‘transaction, etc.. would be deemed to have been withdrawn. The main object in enacting this - provision is that when the Government ‘decides to’ nationalise the transport services or its units; all the means of business should. vest in the Government so that after the vesting the Government does not

“feel itself bound by any commitment or contracts made by the

_ operators which’ might make the policy abortive asa result of which the schemeof nationalisation itself may run into rough weather.

Sub-s, (3) of s. 4 contains a declaration that the vesting of=the stage carriages and other properties shall be deemed to have been . acquired for a public purpose, that isto say, acquisition of not only. ‘the stage carriages or the contract carriages used by the operators but also their tools, implements and workshops would be in public interest ‘inorder to prevent any legal or constitutional objection being takén against thie various moveables which by’ virtue of the. Provisions of the Act vest in the Govefnment.

4” ~e

Xx .

TAMIL NADU ¥. L. ABU uy (Fazal Ali; J)” mo 747

‘Section 5 contains provisions of. a routine nature regarding the ‘submission of accounts, agreements, inspection by Government officers, furnishing of data and details and the like. . Another important provision of the Act is section 6 which provides for a reasonable amount of compensation to be paid to the operators on their proper- _ties vesting in the Government. Sub-s. (1) of s. 6 says that every person interested shal! be entitled to receive such amount as may be determined in the second schedule to the Act, that’ is ‘to say, where " the amount can be fixed by agreement, the same shall be determined _ 4n accordance with the agreement. Secondly, where no agreement can be reached, thie Government shall appoint as arbitrator a person

, who is or has been or is qualified for appointment as a District ’ Judge. .While appointing an arbitrator, the Government may, if necessary, nominate a person having expert knowledge as‘to the ; nature ofthe acquired property to assist the arbitrator. .These two —

. provisions clearly show the attitude of fairness that the Act ‘displayed . towards the operators on the vesting of their properties in the - Government. Cl. (e) of subss. (1) of s. 6 provides that thé arbitrator

-after hearing the dispute and the parties concerned, would determine - the amount which appears to him to be just and reasonable and also

_ Specify the person or persons who would be entitled to the aforesaid | compensation. ‘Clause 1 (f) of s. 6. provides that where there isa dispute of title-with respect to the’ distribution of the ‘amount the same would be apportioned amongst the perséns concerned by the Arbitrator. At the same time, to exclude any further disputes during the process of arbitration, cl. (g) of sub-s. (1) of s. 6 provides. that .

_the provisions of the Arbitration Act, 1940 (Central Act Xx of (1940) shall not apply to the arbitrations made under s. 6.

Sections 7 and 8 contain the usual procedure for filing of claims and the conditions thereon. What is important to be neticed is- that - the award of the arbitrator is not made final but is. subject to an appeal to the High Court..

Section 12 clearly provides that any person aggrieved by an award, may within 30 days from.the date of such award prefer an appeal to the High Court. The proviso however empowers the High Court to condone the: delay i in suitable -cases where sufficient cause preventing a claimant from filing the appeal within the time prescri- *

_ bed is made out, -

SUPREME COURT REPORTS © — [1984] 1 S.C.R.

- Before going to other provisions we would like to. make: a reference to the schedule which fixes the scale. of compensation and- enunciates the principles on the basis of which it is to. be- awarded to the operators whose stage Carriagés or contract catriages are taken- over by. the Government. The table containing the guidelines for

‘ payment of compensation may be extracted below :

15..

rn v1: TABLE

. Period Not more than six months prior to the notified date

More than six months prior to the notified date but’

not, exceeding one year * More than one > year but not. exceeding two years

Moré than two: years but not exceeding three years ©

More than three: gears but not excecding four years

More than four years but not exceeding five years

More than five, years but not exceeding Six years.

- Moré than six years but not 3 exceeding seven n years

More than seven “years but “not. exceeding eight

. years ‘

More than, cight years bittm not exceeding nine years

: More than nine years but not ‘exceeding ten: years.

More than ten years but not exceeding eleven years

“More than eleven years but not exceeding twelve _ years - , years

More than thitteen years -

More than twelve years but not -exozeding thirteen

Precentage

85°

* 66-2/3.

“10 a an

. ot aM NADU ¥. L, ABU (Fazal All, J.) - 749

It would be seen from a perusal of these guidelines ‘that heavy compensation has not been provided for, obviously because if com- pensation at the market ‘rate is given it. would amount to a huge

‘* drain on the State treasury which may cause a complete financial - breakdown. and. thus frustrate the very policy of nationa isation, We might mention here that the respondents argued that the rates of compensation wete wholly inadequate and absolutely illusory.

because the’ arbitrator or the High Court cannot travel beyond the

' second schedule in assessing the compensation. Mr. S.S.: Ray, ..

appearing for the appellant State fairly conceded that the schedule “was merely a sort of a guideline which was not exhaustive for deter- mining the quantum’ of compensation and it may be taken asa concession on behalf of the State that the officers fixing the com= pensation were entitled to make marginal but not vital departures from the principles of compensation laid down by the Act which

_ Seems to be the real intention of the statute in question by providing - "for a broad-based compensation and allowing the same to be decided -.

by the highest court of justice in. the State, viz., the High Court.

“In the circumstances, it cannot be said that the compensation provi- . _ ded is absolutely illusory or shocking to the conscience of the court. which i is the only requirement of Att. 312):

Then there are other routine provisions contained i in s.11 which provide the manner-in which the payment of the amount adjudicated by the compensation authorities is to be given. Clause 1A .even _awards interest at the rate of 6 1/2 per cent. per.annum on. the said amount and certain other options are given to the operators.

"Section 13 pruvides the. legal procedure to be adopted in arbi- tration proceedings and for that. purpose the arbitrator would have

-. all the powers of a civil court.while’ trying a suit under the Code of Civil Procedure, 1908: Section 13 also applies this procedure: for summoning and enforcing the atteadance of witnesses, requiring discovery'and production of documents,’ reception of evidence .on . . affidavits, requisitioning any public record or a copy thereof from any court or office and issuing commissions for examination of wife "nesses or documents.

Section 14 however. carves out an exception . tegarding “the acquisition of the stage carriages or contract carriages: from applying » . for any new permit or renewal of the existing permit: after the -acqui- - sition of the stage carriages or contract carriages -by the State. It - Falso Provides that every application for grant of anew permit or

750 | SUPREME COURT REPORTS [1984] 1 scr.”

renewal of an existing peciit or any appeal or revision relating. ‘thereto made or. preferred before the 14th January 1973, the date of the enforcement of the Act, and pending before any court: or any officer or authority or tribunal shall abate. This appears to us to. be a very salutary Provision. in order to prevent future recurring disputes. ra Section 13 provides that the transfer of the stage or - contract _ carriages.on or after 14th January, 1973 and before the notified. date, is prohibited. It further provides that no person shall after the aforesaid date transfer by way of sale or gift any stage or contract carriage liable to be acquired under the Act. —

Section 16 provides for gant of temporary permits to. the operators and the circumstances ‘under which and the period for - which they could be extended or transferred and asa consequence of the pivotal section it also provides. that no stage or contract ‘ carriage operator would be able to obtain any temporary permit in respect of any area. or route which has been notified in the Act.

Section 17 prohibits transfers of any. stage or contract carriage and enjoins that if any transfer is made, the shall be void” and is - liable to be acquired by the Government. Section 18 makes’ a provision for the appointment of administrators for arranging the taking over of the acquired property and fer.carrying out the duties assigned -to them. Section 19 also makes an identical: provision for appoint ment of authorised officers. Section 204s also an important provision which has been introduced for the purpose of safeguarding the exist- _ ing staff of the operators for being absorbed in the State Transport ’ Department of the Government, on a given scale, or any corporation er company owned by the Government and for this Purpose a number of steps have been detailed in this section. .

Section 21 gives the resultint consequences of. the policy of .

nationalisation and prescribes the modes in which the newly acquired stage or contract carriages are to be run by the corporation or the company or the State Transport Department of the Government to which the acquired property is transferred.

Section 25 is also a sort of a foutine provision making provisions for issue of orders, notices and the manner of delivering the same, etc.” Section 26 is an important section which. exempts an” 0 Seah

' @ > .

“TAMIL NADU ». L, ABU (Fazal Ali, J.) 751

‘particular types of stage or contract carriages from the operation of. the Act, such as stage‘ or contract carriages held by the Central’ Government, any State Government, any. company controlled: or owned by the Central Government or any State Government. Section 27 is the usual section which provides immunity to’ persons dis- ” charging their duties in good faith in pursuance of the Act. Section 28 bars jurisdiction of civil courts if certain matters. Section 29 is a penal provision which provides for ppnishment for, offences committed in violation of the provisions of the Act. Section 30 invests cettain officers like . administrators, arbitrators, authorised officers, etc., with the status of a public servant within thie meaning of s. 21 of the Indian Penal Code. Section 31 is the saying provision which overrides other laws on the passing of ‘the ‘Act. Section 32 is the rule-making power given to the Act. mo

Before discussing the reasons given by. the High Court for striking down the Act we might dispose of an important argument. advanced before us for the appellant to the effect that the provisions. . of this Act are almost in pari materia with the Karnataka Act which formed the subject-matter of a constitution Bench decision of. this Court by which the Karnataka Act was upheld. On the basis of the aforesaid decision, it was submitted that the matter stands concluded bya seven-Judge Bench decision of this Court’and the appeal should be allowed on:this ground alone, On the other hand, the respondents challenged the correctness of the appellant’s submission: and contended that there are marked and sharp points of difference between the two Acts. We are, however, unable to accept this contention a for the reasons given hereafter.

By and the large the provisions of the two. Acts appear to be identical in many respects and the general structure and. the funda- ‘mental features of the two Acts are almost the same. The broad * features of the two Acts may be summarised as follows :

(a) both the Acts aim at the policy of nationalisation ‘of | transport services (Karnataka Act started with only stage carriages but the Act has also taken within its . ‘fold contract catriages), -

.(b) both the Acts clearly mention that the object of nationalisation was ‘to secure the ends of | Art, 39 (b) & (0),

752 - - ‘suPaans ool RUPORTS ' [1984} 1 S.C.R..

a) both the Acts seemt to convey that being at national

- policy evolved by the Government itself, it would - undoubtedly be i in great public interest,

; (a) - the process of distribution of material resources and ' the units taken over is more or less the same,

(e) by and large the scope and ambit, « : the ‘manner and : method of formulation of the nationalisation policy . are ‘identical, and

(f) the principles of compensation and the machinery

“provided for determining the same in both the Acts are, absolutely similar with minor and negligible variations here and there.

4 Thus, all the arguments addressed regarding the constitutional validity of the Karnataka Act before this’ Court apply equally: and | fully.to the present-Act and in view of the’ clear decision of this Court in the Karnataka case very little survives so far as thé argu-

" ments in this case, advanced: on behalf of the respondents, are concerned. - On. the other hand, three important ° decisions of this Court, Viz. ‘Minerva Mills, Waman | ‘Rao and Sanjeev -Coke Manu-

". facturing Co. cases, which were given after the Karnataka case,’ ' reinforce and reiterate the conclusions reached by; this Court. in the

Karnataka case,

- Before examining the reasons given by the High Court. we

_ would like to mention certain important facts which have come into - - existence after the Act was passed by the Tamil Nadu legislature as

~ also after the judgment of the-High Court, which . fall under three

; heads :

(1) that by virtue of the Constitution (25th Amendment) ‘Act,

‘1971 a new article in the shape of Art. 31C was inserted in” the. Constitution with the avowed abject of. highlighting the importance | _-of some of the important directive principles contained in part IV of ° the Constitution. Art. 31C provides that no law made by a legislature

_ in order to secure the principles specified in Art. 39 (b) & (c) shalt

‘deemed to be void on the groind that it abridges any of the rights

‘enshrined in Arts. 14, 19 or 31. The said amendment further provides that no Jaw containing a declaration that it has been passed for giving effect to such a policy: shall be called i in question in A any court on the

"TAMIL NaDU ¥. L, aBU (Fazal Ali, J.)

“ground that is does not gfve’ effect to such a policy. There’ is ‘a proviso to Art. 31C which mandates that before the provisions of the

'- Article can apply,. the law must. have received the assent of | ‘the

President of India.

' The Tamil Nadu ‘legislature seems to have taken . abundant precaution of mentioning the objects contained in Art. 31C by. providing clearly in its preamble, as indicated above, that the Act -was passed with the intention of giving effect to the principles enunciated i in Art. 39 (b) &(c).

(2) that when, the new Art: 31C. created controversies, 13 Judges ~ . of. the Supreme Court examined not only the said article but also a” number of other provisions of the Constitution in order to decide -:

as to how. far the amended provisions affected the basic structure’ of the Constitution. It may be sufficient-to state here for the purpose

_ of this case that so far as Art: 31C is concerned, it was unanimously held by the entire Court that the first part of Art. 31C, introduced by the Constitution 25th ‘amendment Act, was valid.

(3) Thus, it is manifest that Art. 31C gives a complelte protective umbrella to any law passed with the object of achieving the aims and-goals of Art. 39 (b) & (c) so as to make ‘it immune from chal-lenge on the ground that the said law violates Arts. 14,19 or.31.

The only condition for application of Art. 31C is that theré should .be a direct and reasonable nexus between the Jaw and the provisions.

x of Art. 39 (b) & (c), and the reasonableness would be regarding the ” nexus rather than the law. ;

‘In view of the aforesaid developments, most of the conclusions a“ arrived at and the important Teasons given | by the High Court no

__longer survive and fade into oblivion. The counsel for. the parties also. realising this difficulty did not press all the arguments that were ° advanced before the’ High Court or accepted it but confined their - arguments to the framework and applicability of Art: 39 (b) & (0).

- In fairness to the High Court, we cannot blame it because the law | on Art, 31C was crystallised after the delivery of its. judgment. We, therefore, propose to give.a very brief summary of the reasons given by the High Court for striking down the Act laying s stress only on the _ points that survive. a,

--In the first place, the High Court seems. to have accepted the

"| argument of Mr. Chari, appearing for the operators, that by virtue — |

754 oo SUPREME COURT REPORTS 11984] 1 8.0.2.

“of the Act the financiers who. were the owners of ‘the stage or “‘von- | tract carriages would be completely wiped out of their: business and .

therefore Art. 19.was clearly violated. As Art. 31C gives complete

-immunity from challenge in respect in of.any law made to promote objects enshrined in Art. 39 (b) & (c), this argument no longer survives and was wrongly accepted by the High Court.

This now brings us to the nature of compensation awarded to

. the operators in the Karnataka case which- appears to be on all fours ‘with the facts of this.case. We must hasten to add that as already

‘discussed above, in view of Art. 31C no compensation is necessary as Art. 31 (2) is clearly excluded by Art. 31C but proceeding on: the assumption that some sort of compensatory relief may be necessary, _ we approach this question only as a piece of an alternative argument. To begin with, while dealing with the question of compensation, Untwalia, J., in the Karnataka case clearly pointed out that by virtue © of the 25th amendment,. the question of compensation may not

_ arise, yet right from Bharati’s case uptodate it was bas now. been held that the amount payable in respect of acquired property should

" be fixed by the législature or determined on the basis of principles _ contained in the law of acquisition and should not be wholly arbi- trary or illusory or monstrously. undervalued, and in this connection, the learned Judge-observed thus :

“For the purpose of deciding the point which falls for consideration in these appeals, it will suffice to say ' that still the overwhelming view of the majority of Judges in Kesavananda Bharati’s caseis that the amount payable for the acquired property either fixed by the legislature or __ - determined on the basis of the principles engrafted in the — law of acquisition cannot be wholly arbitrary and illusory. ~ When we say so we are not taking into account the effect ‘of Article 31C inserted in‘ the Constitution by the 25th Amendment Weaving, out the invalid Part as declared by the majority).” .

The lines underlined by us contain:‘an important emphasis to show that the complexion of: the necessity of compensation has

_ completely changed in vieW of the 25th Amendment’ by which Art. ’ _ 3 € was introduced and Untwalia, J. was, therefore, careful enough

7 a (Emphasis supplied) - ne ap aM NADU Y. L. ABU (Fazal Ali,) 735 not to imply that even after the passing of the 25th Amendment, the. question ‘of compensation would still be necessary.

In the same strain, Tyer, J., in that very case observed as lan follows : . . , “Pull compensation with a formal difference . The court will not question the ‘adequacy’ directly, but ‘interpret’? the amended artitles into the same desideratum. 7

The Court could satisfy itself only about the amount not being a monstrous .or unprincipled under-value .

The payment may be .substantially less- than the market value, the principles may not be all-inclusive,- but the court would not, because it could not, upest the taking -save’ where the principles of computation were too arbitrary and illusory to be unconscionably shocking.”

Thus, from a perusal of Bharati’s as also ‘Karnataka cases the following principles for assessing. compensation after the amendment of Art. 31 (2) by substitution of the word. “amount’, may be © summarised :

(1). that compensation should not be | arbitrary or ; illusory,

(2) that the amount fixed as compensation should not: be

; unprincipled, - . Oo (3) that the compensation souglit to be paid should be so . . arbitrary or illusory as to be un conscionably . oe shocking, and ° :

(4) ‘it is not necessary that the compensation must

, ae Tepresent the actual market value or be adequate, for

- ; even if compensation is inadequate ‘but not illusory, the requirement of Art. 3 (2) is fufly complied - with.

Relevant sections of the Act, on the question of compensation are completely in acCordance with the principles enunciated above

(756 + ———* SURREME COURT REPORTS [1984] 1 Isc. and hence the argument of the counsel for the respondent that. the : compensation is wholly inadequate or illusory must be overruled. .

_ Applying these prinelplés to. the provisions: of compensation, : discussed above, it seems to us that the facts of this case are identi- ‘cal with those of. the Karnataka case. The prtnciples on which

’ compensation was awarded in that case have been bodily lifted and ~ placed in the present Act.- The main features of the Act relating to. | compensation may be summarised thus :- oe -

@). A regular method “and the manner in which compensation is to be’ assessed i isto be found in | the . second schedule to the Act,

(2). wé have already mentioned that Mr. Ray conceded ~. during the course of arguments that the: said schedule

- is not exchaustive but it is open to the arbitrator or | | the High Court to make marginal . ‘changes as and

_ when necessary,

(3) -the factors and circumstances to be taken into

' _ eonsideration vide’ section 6 and the second schedule clearly spell out that if compensation is .allowed on

_ the basis of those factors it cannot be said to’ be atbitrary, illusory or monstrously unconscionable.

‘It is true that the’ compensation awarded may not represent ‘ the market value or perhaps-may be even inadequate but that is néw not the test laid down in the amended Art. 31 (2). -On this ground, therefore, the. constitutionality of the Act cannot be challenged.

All said and done, iit was contended by the respondents that at . least the ‘taking over of both the stage and the contract carriages

.° alongwith the workshops, ete. amounts ‘to a very harsh provision so — to bé confiscatory. We have already dealt . with this argument. ‘In addition to what we have stated, it may be -observed that once a

” policy of nationalisation i is in ‘public interest and for public good, .

some losses, some damages, some prejudices and some harsh conse-.

~ quences are bound to follow but this does nat mean - that the ‘afore- © | said considerations should result in a stalemate of the policy of State monopoly or nationalisation otherwise the country cannot move forwarded even an inch from where it was when out .Constitution ¢ame-into force, Gajeadragadkar, J., in-Akadasi Pabhan’s. case (supra) -

"RAMIL NADU ¥. E "ABU. (Fazal Ali, J )" . 757

» had pointed out that these are matters of high policy and the courts - “- ° cannot go behind the policy: unless the Policy itself is patently”

‘unconstitutional or arbitrary.

ae _ We have found. ‘that ‘the compensation awarded: or the principles contained in- the various ‘sections of the Act are’ not ~

‘illusory but amount to. a just and -sufficient compensation to the Operators whose properties are taken away. . In fact, it was to meet

4, ' guch situations that. Art. 31C was : introduced so that any obstacle’ resulting in evil consequence to.the operators or persons whose © properties are taken over is completely removed. For these reasons, we feject this argument of the respondents’ counsel as _being totally ill-fou nded. ,

>. of the entire transport services along with the vehicles and workshops, -etc., cannot bé in public interest because it’ would not serve any public good. In the same token, it was argued that the manner an@ ~ method in- which the nationalisation policy has been enacted in the -

a) ‘that taking over of the’ vehicles, ‘tools, implements and the workshops, etc., is not contemplated by Art. °

, Ss 39 (b) as they are moveable properties and therefore not material resources,

‘- ne ¢)) that the measure, if translated into action, does not ; ee prevent the concentration-of wealth in the hands -of. L - a few and hence Art. 39 (c).is not attracted at all.

We shall deal with these arguments one by one. Coming to the nN said argument is to be stated only to be rejected as it has been ni ‘clearly pointed out in the Karnataka case that a nationalisation policy of this type is undoubtedly i in public interest.

Ta Black’s Law Dictionary (Special Deluxe fifth edition) at page

- 1107 the. words ‘public purpose’ have been defined thus :

“The term is synonymous with governmental purpose y , ...A public purpose or public business. has: for its “objective the promotion of the public health, safety,

‘ morals, general welfare, security, prosperity, and conten-

. It was ‘then. argued for the respondents that the nationalisation first atgument that the nationalisation is not. in public: interest, the ©

758 + . " SUPREME COURT REPORTS - {1984) 1 scr. o ment of all the inhabitants or residents within a given -

* political division, as, for example, a state, the sovereign

‘powers of which are ‘exercised to promote such, public

Purpose or public business. ”

“This matter is concluded bya decision of this Court .in the Karnataka case where it was held that the purpose of a public body ‘5

. toruna public transport service is undoubtedly in public interest and in this connection Iyer, J., observed thus : -

“The. purpose “of a public ‘Body to run.a public __ transport service for the benefit of the people, operating it « . in a responsible manner through exercise of public power : whiéh ‘is controlled and controllable by society through its organs like the legislature and, at times, even the court, -is manifestly a public purpose,”’ .And Untwalia, J., speaking for the Court made the following observations 2 a ,

_ “Why can’t moveables be acquired ‘for commercial purposes if the exigencies of the situation so require, A particular commercial activity of the State may itself be for a public purpose.”

In the instant case also, it would appear that the State has nationalised the .stage and contract carriages for the purpose of providing a general'and expeditious transport at reasonable ratés to | the members of the public and in view of the observations refetred ” to above, we can come to no other conclusion except that such a policy is undoubtedly in public interest and. involves an important

_ public purpose, _-

Asa a limb of this argument, the High Court held that Art. 39. + would not be applicable-in the’ present case. As extracted above, Untwalia, J., in the Karnataka case summarily rejected this very argument and further.pointed out that where a legislature thought of *

' preventing misuse in the running of the vehicles by private operators and in order to provide better facilities to the transport passengers or to the general public, acquisition of vehicles.or for that matter ‘the: rights and interests in the contract carriage operators alongwith their land, buildings, workshops, etc., would always be permissible. We cannot conceive of a greatet-public interest in respect of a policy faMIL NADU ¥. L. ABU (Fazal Ali, J), 7 459° than where the legislature expressly intends to promote’ or . secure the objects of Art. 39 (b) & (c) particularly when, as indicated above, the said two clauses have been conferred a special status and given an * impregnable protection. by Art, 31C itself. We, therefore, fully agree “ with the view taken by this Court in the Karnataka case and hold that the nationalisation of the transport services is “undoubtedly in”

" pablis interest.

"As regards the application of Ait. 39 (b) & (c), the High “on on the basis of previous decisions of this Court held: that —

. a) the objects of Art. 39 ©) & ie) have not been "* gubserved, and . (2) Art. 39 has no application to. moveable: properties and since the vehicles taken over by the State under ° the Act were moveable properties, Art. 39 was not applicable in the presént case.

With due respect, this view is not correct and proceeds ona.

misconception of the law and interpretation of the words ‘material resources’ as mentioned in’Art. 39 (b). In fact, Art. 39 (b)' does not - ' mention either moveable. or immoveable property. The actual expression used is ‘material resources of the community’. Material resources as enshrined in Art. 39 (b) are wide enough to cover not

_ only natural or physical resources but also moveable or immoveable . properties. Black’s Law Dictionary’ (supra) defined’ the word.

‘resources’ thus : “Money or any property that can be converted to meet needs; means of raising money or supplies; capabili- ' ties of raising wealth or to supply necessary wants.”

The mere fact that the resources are material will make to

’ difference i in the concept of the word ‘resources’. In Stroud’s Judicial. _ Dictionary (Vol. 3) at page 1634, ‘the Word | ‘material’ is defined , thus :

“ Materials, tools, or implements, to be used ‘by such artificer in his trade or occupation, if such artificer be employed in mining; ... ..:.. wooden props or “sprags”. though neither ‘tools or implements”. were “materials”

(p. 1178)

700° SUPREME court kepons [1984] i s.c.R "within these words... - ‘Material’ includes a painter's aa

._ bucket of distemper and brush, ”

In Webster’s Third New: International Dictionary at page 1934 ° : » the word ° resources’ has been defined thus : 7 oy

“available means (as of - -a’<country or business) a i o computable wealth (as i in money," ‘property.)”

In words and Phrases (Permanent Edition), ‘Vol. 37A, the word" ‘Resources’ has been defined at page 16 thus : ae os “Resources. included products of . farm, forest; ... - manufacture, art, education, etc...: The “‘resources” of a ‘county include its land, timber, coal; crops, improvements, . failways, factories and everything that § goes to make up its © a wealth or to Tender it desirable ° a ; @

In the Karnataka ¢ case, Iyer, J, observed thus :

“And material resources of the" community’ in ‘the: z “. gontext of re-ordering the national economy embraces “ali the national wealth, not-merely natural resources, all the . .: private and public sources of meeting material needs, not. 7 merely public possessions.”

The question as s to the connotation of ‘material resources, as. .. " mentioned i in Ait. 39 (b) & (c) came up for consideration in a recent constitution-Bench decision of: this Court in’ Sanjeev Coke Manu- __ ' facturing Co’s case (supra) where. one of us (Reddy, | J. y made the --following observations : ae

- The next question for consideration is whether the Coking Coal Mines (Nationalisation) Act isalaw direct- . : ing the policy of the State towards securing “that the ~ ~». ownership ‘and control ofthe material resources of. the ‘

~ community are so distributed as best to subserve the com-

- mon’ good. Coal is, of course; one of the most important known sources of energy, and, therefore, a vital national resource. ,

TAMIL tabu y. L, ABU (Fazal Ali, J) oe 6b i ~ +. Shri Sen argued that material resources had first to

2 _ be atquired by the State before they could be ‘distributed.

oo ’ Alaw providing for :acquisition was not a law for ‘distribution. We are unable to appreciate the submission .

£ _ of Shri Sen.” | _

The above decision a therefore furnishes a complete faswer to-the

; : reason given by the High Court or the arguments advanced ‘before + us by the counsel for the respondents on the question - as to the _ nature and character of material. Tesources.

* Summarising the arguments relating to ‘compensation and the prejudice caused to the operators, and the nationalisation policy *- . contained in the Act, the position seems to. be as follows :- a In the first place, as indicated above, once Art. 31¢ applies, the net of the protective umbrella is so. ‘wide as to cut at the root of even ‘Art. 31 (2) which alone.survives after Bharati’s case. We have already pointed out that if the State chooses to monopolise trades in © certain essential commodities or properties, for the purposes men= tioned ia Art. 39 (b) & (c), Art. 31 (2) would be completely excluded, otherwise no State monopoly is ever possible because a reasonable amount which may have to be paid'as compensation may completely

. drain out the financial resources of the State or the public exchequer a _ to such an extent that the noble endeavour to monopolise a parti-"

‘cular trade would become almost impossible, as. a logical result of , which the purposes sanctified in Art. 39 (b) & (c) would also become incapale of implementation. , It was for these reasons that Parliament thought it advisable to.protect-the objects contained i in Art. 39 (b) eo

eee , Secondly, Art. 31 (2) by virtive of the 25th amendment has “ . * ‘knocked out the word ‘compensation’ and has substituted the word: 4 ‘amount’ which gives ample discretion to the State to fix a reasonable

4 amount if the property of an. individual, is taken over for public purpose. In the instant case, as an-intense social purpose which is a indicated by the Constitution, is involved even an apology of of: compensation would be sufficient to comply with the -conditions: js réquired by Art: 31 (2). Even so, in the instant: ‘case, as pointed out above, there is a clear mode of compensation provided which is to- y . ‘be assessed by an arbitrator and is. subject to judicial scrutiny by the: pos highest courf'in the State,. namely, the High Court.: The schedule _—_— _which contains the principles of compensation is: wide . ‘enough to.

76 - ~~ suREME count REPORIs = —*[1984) i sccat, ensure a fairly reasonable compensation to be given to the operators whose veliicles are taken over. The court in such mattéts cannot

‘ interfere with the amount so fixed unless it is shown to the court’s . satisfaction that the amount-fixed is so monstrous as to shock ‘its “ conscience. Having regard to the provisions in the schedule and the

“manner andgmode of grant of compensation, we are unable to hold ’ that the compensation provided for is ‘wholly inadequate or absolutely monstrous.

Thus, so far as this aspect-of the matter is ‘concerned, two”

conclusions brodly emerge :— e

(1). that in view of the express provisions of ‘Ait. 31C | which excludes Art. 31 (2) also where a. property is acquired in public interest for the avowed ‘purpose giving effect to the principles enshrined in Art. 39 (b) & (c), no compensation is necessary and / Art. 31 (2) is out of the harm’s way, and

» (2) that even if the law provides for compensation, thecourts cannot go into the details or adequacy of .the compensation and it is sufficient for the State to prove that the compensation was reasonable and _not . monstrous or illusory so as to. shock the: conscience . of the court.

. The persons whose properties are taken over cannot be heard to complain that the compensation awarded to them should be ‘according to market value which, if conceded, would defeat the very purpose and objective of Art. 39: (b) & (c), In the instant casc, both ~ the conditions mentioned above are fully satisfied. having regard to the provisions of the Act.

. The last contention raised by the respondents .was that the conditions or objects mentioned in Art. 39 (b) & (c) are not subser- ved by the nationalisation poli¢y codified by the Statute because _ there is no.distribution at ail in the sense that the property taken | over is distributed to various thember of the community for their benefit.- Moreover, the members of the community have been deprived of the services rendered to them by thé operators under permits issued by the transport authority. So far as this argument-is concer ‘ned, it is based’ on a serious misconception of understanding the real

- position. The word ‘distribution’ used in Art, 39 (b) must be broadly eo

TAMIL NADU ¥. L..aBU (Fazal Ali, J.) 163

“construed so that a court may give full and comprehensive effect to. °

_ Statutory intent contained in Art. 39 (6). “A narrow construction of

' the word ‘distribution’ might defeat or frustrate the very object which - the Article seeks to subserve. In Black’s Law dictionary (supra). the word ‘distribution’ has been defined thus"

“The giving out or division among a number, sharing or parcelling ‘out, allotting, dispensing, apportioning,”

' (p. 426)

Similarly, Webster’ s Thrid International dictionary at page 660 defines ‘distribution’ thus :

“the position, placement, or ‘arrangement (as of a mass or the members of a group); the disposition or arrangement in rational groups or classes : CLASSIFICATIQN the accurate distribution of several rare zoological’ - specimens; delivety or conveyance (as of newspapers or goods) to the members of a group (the distribution of telephone directories to consumers) in charge of company _ - ales and distribution; a device, mechanism, or system, bf: which something is distributed (as from a main sourte); the marketing or merchandising of commodities.”

In ‘Family Word Finder’ published by" Readers Digest the word ‘distribution’ has been defined at page 237 thus :

“dissemination, scattering, spreading, circulation, grouping, organisation, apportionment, allotment, allocation, division.” ”

it is obvious, therefore, that in view of the vast range of transactions contemplated by the word ‘distribution’ as mentioned in the dictionaries referred to above, it will not.be correct to. _ construe the word ‘distribution’ ina "purely literal sense so as to. |

_ mean only division of a particular kind or to particular persons. The words, apportionment, allotment, allocation, classification, clearly fall. within the broad sweep of the word ‘distribution’, So construed, the word ‘distribution’ as used in Art, 39(b) will include | various facets, aspects, methods and ‘terminology of a broad-based concept of distribution. In other words, the word ‘distribution’ does not merely mean that property of one should be taken over and distributed to others like land reforms where the lands from the big

$164 . 7 SUPREME CouRT REPORTS: co [1984] 1 SCR,

_ Jandlotds are taken away and given to landless labourers or for that “matter the various urban and rural ceiling Acts, That is only one of the modes of distribution ‘but not the only mode. . In the instant case, as we have already: pointed out, distribution i is undoubtedly’ _ there though in. a different shape.- So far as the operators were — ‘ concerned they were mainly motivated by making huge ‘profits and . were most reluctant to go to villages or places where the passenger tarffic is low or the track is difficult.: This naturally causéd serious inconvenience to the poor members of the community ‘who were: . ‘denied the facility of visiting the towns or ‘other areas in a transport. . _ By nationalising the transport as also the ‘units the vehicles would.

be able to go to the farthest corner of the State. and penetrate as deep as possible and provided better and quicker - and more effica- - cious facilities. This - would undoubtedly be a distribution for the

‘common good: ‘of the people. ¢ and would be Sloarly covered by cl 4b)

of Att. 39.

In the Karnataka case, the word ‘distribution’ Clearly fell for interpretation and Iyer,J. made the following observations : :

“The key word i is “distribute” and the genius of the .

_ article, if we may say so, cannot’ but be given full play as it fulfils the basic purpose of réstructuring thé economic . - ‘ order. Each word in the article hasa strategic role and - the whole article is a social mission. It embiaces the entire material resources of the community. Its task is to distribute stich resources. Its goal is so to undertake "distribution as best to subserve the common good. It reorganizes * BY such. distribution the ownership and control... . so

Futhemore, in .the _ Sanjeev Coke Manufacturing. Co.’ S case, .

Reddy,J., observed thus : To. ‘distribute’, even in its simple dictionary: mean- ““ ing, is to ‘allot, to divide into classes or into groups’ and . ‘distribution’ embraces ‘ ‘arrangement, classification, placement, disposition, apportionment, the way in which items, . a quantity, or the like, is divided or apportioned; the | system of dispersing goods throughout a community.”

~The very’ ‘pertinent expression used by Reddy,J. is that those cconomitts who believe in bringing @ about a social revolution would hardly find any ‘difficulty in treating nationalisation of transport as a distributive process for the good -of the community. _This is

' exactly what the. Act’ seems to achieve in. securing the objects. con- tained i in Art. 39(b)8(0) of the Constitution.

By. nationalisinig the ‘transport services the transport ‘business ;

which was run by a handful of. “capitalists would prevent the: concentration of wealth in the hands of a few and would: therefore benefit

- the community at large.

This aspéct ‘of the matter was’ also argued in the Karnataka case-but strongly repelled, were Untwalia,J. pointed out . that taking over the transport services was undoubtedly for the common good — ’ . of the people and ‘was not meant for augmenting the revenue of the

State because the profits, if any, made by the services would ga to accomplish projects for the betterment of the community and made

- the following observations :

“The legislature thought that to prevent such. misuse — and to provide for better facilities to transport passengers ~ and to the general. public it is necessary to acquire the ' .vebicles, permits and all rights, title and interest of the ‘contract carriage operators in or over lands, buildings, workshops and. other places and all stores, instruments, machinery, tools, plants, ete., as mentioned i in sub-section (2) of section’4 of the Act, ”

Thus, in short, the position seems to be that by virtue eof the

‘nationalisation policy. the twin objects of Art. rt, 39(b)&(0) are fully secured, ‘ - }: ”

Finally, it was argued by the respondents that even if the transport services were nationalised, there was absolutely no rationale - _ behind the taking over of the vehicles~ of ,the operators, some of ' whom were running on hire-purchase basis: - This argument has no force because once it-is recognised that for the purposes mentioned

“Gn Aft. 39(b)&(c) the entire service including its units, workshops, etc., could be taken over on payment of some compensation, the fact that the Xehicles should be spared is only an argument of desperation.

~ These are,. therefore, the important contentions advanced before

Aus by the respondents and the reasons given by. the High-Court in *-

- striking. down the Act. We are of the opinion that in fact this

“Tamil NADU ¥. Ly ABU ws (Fazal Ali, J. ). 765

"7166 at SUPREME COURT REPORTS (1984 S.C.R, forced by the later decision of Sanjeev Coke Manufacturing Co.'s case.

and-all the contentions -raised before ‘us by the respondents —

- (operators) fail. The Act is, therefore, held to be constitutionally.

valid in-all respects. We allow the appeals, dismiss the writ petitions, set aside the judgment of the High Court and hold that the Act is constitutionally valid. . . . . e , * However, as some portions of the Act, in view of the timelag, have to be made. Mr.‘Ray, appearing for the appellant, had also

‘conceded that so far as the question of compensation was concerned, it was open to the arbitrator or the compensation authority not to confine itself strictly to the yardstick contained in the second: schedule to the Act. but they can make marginal changes as the circumstances require.

As aappellants have succeeded in the appeals, we revoke the the interim order passed by this Court on June 26,-1973 directing | the appellants to pay-Rs. 100 (Rupees’ one hundred) per day ‘to the | respondents. In the peculiar circumstances of this case we make no -order as to costs.

so | Petitions dismissed.

- may have become out of date, a few consequential amendments may .

N.V.K. oo Appealy allowed and- rh.

_case is clearly covered by the decision of the Karnataka case aS rein- ~ |

Text of the official Supreme Court Reports (S.C.R.) edition, extracted from the court’s PDF. Page headers and margin letters have been removed; a stray one may remain inside a paragraph. For citing, rely on the official PDF.

State Of Tamil Nadu, Etc. Etc. v. L. ABU Kavur BAI And Ors. Etc.

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